Spain should not rush savings bank sales 27 Sep 2011 The country’s bank rescue fund is preparing to offload a bust lender with the help of generous guarantees. But a deal would transfer any upside to buyers, while leaving the state on the hook for most future losses. With more bank nationalisations to come, Spain should hold on.
Global SWAT team needed to close tax loopholes 26 Sep 2011 Tax-based financing deals like those between U.S. and UK banks being targeted by U.S. authorities use legal mismatches to reduce tax bills. They are lucrative, but have no economic value. Such questionable arrangements might be best tackled in a focused multilateral forum.
Pro-cyclical Wall Street protesters missed moment 26 Sep 2011 Those marching against finance have failed to build on the rallying cry that began five years ago. Since the crisis started, shareholders and regulators have already pummeled the banks. These rabble-rousers should have arrived earlier - or waited for greed to truly return.
UBS shouldn’t wait to put Weber in the chair 26 Sep 2011 The former Bundesbank chief is not due to take over as chairman until 2013. But the rogue trading loss and departure of chief executive Ossie Gruebel has left the Swiss bank reeling. Provided his former employer agrees, UBS should put Axel Weber in charge as soon as possible.
Berkshire buyback a move best left to Buffett 26 Sep 2011 The Sage’s conglomerate has taken the highly unusual step of repurchasing shares, at up to a 10 percent premium over book value. It doesn’t mean it’s a strategy to be followed, though. If shares of other companies were truly undervalued, Berkshire probably wouldn’t be buying its own.
Equities’ hot money can draw comfort in cold stats 26 Sep 2011 Investors fear the worst, and may not snap out of their funk until prices touch rock bottom. So stocks could shed another 15-30 percent. But when the world economy eventually recovers, shareholders could kick themselves for not taking advantage of this year’s cheap prices.
Time to close China’s VIE loophole 26 Sep 2011 No-one benefits from the fuzziness around the VIE, a structure that lets foreigners take quasi-ownership of Chinese companies in restricted sectors like the web. Their usage is spreading. VIEs make regulators look weak, and investors risk losing their shirts. Clarity is needed.
Gruebel’s principled departure leaves UBS adrift 24 Sep 2011 The man brought in to save the Swiss bank felt the need to take responsibility for the rogue trader. But interim boss Sergio Ermotti only just arrived in April. If an estimable veteran like Gruebel couldn’t rid the deep rot from UBS, the future of the investment bank looks dim.
Misguided share buybacks at least help Wall Street 23 Sep 2011 Companies don’t often time stock repurchases well for their own accounts. But the roughly $500 bln expected this year couldn’t come at a better juncture for ailing investment bankers. IPOs and other new equity deals have slumped, so even paltry fees on buybacks will be welcome.
UBS, Yahoo and HP have made failure traditional 23 Sep 2011 The Swiss bank’s $2 bln rogue trading loss echoes its U.S. mortgage misadventures while persistent strategic drift led the two tech companies to chuck out their bosses. All three have self-images that are badly out of date. Few companies can recover from this cognitive disorder.
Meg Whitman is unjustifiable choice for HP CEO 22 Sep 2011 The former eBay boss only joined the tech company’s board this year. The feckless body has ousted three previous outsiders, damaging HP each time. Whitman’s experience in hardware and business software is limited. Her powers of persuasion will take HP only so far.
Fed’s Twist puts Wall Street in a spiral 22 Sep 2011 Extra stimulus pushed 10-year Treasury yields to a new low and could leave them under 2 pct for a while. That doesn’t just crimp interest margins for retail banks; it also squeezes already struggling debt traders. Financials now look nothing but a super-long-term investment.
Madoff trustee earning his eye-popping keep 22 Sep 2011 Irving Picard’s fees now top $224 mln, with the meter still running. Cleaning up the sprawling Ponzi scheme doesn’t come cheap. But it’s peanuts compared with the Lehman bankruptcy tab, and Picard is getting more than twice the return on the dollar. He could turn out a bargain.
EU bank rescuers have fewer options than in 2008 22 Sep 2011 If lenders fail to recapitalise privately, governments will step in. Some tools from the last crash, like preference shares, now look out of date. State-underwritten rights issues could work. But to solve the crisis, the euro zone also needs coordinated action on bank funding.
No time for ritual sacrifice at UBS 22 Sep 2011 Top brass bear ultimate responsibility for the Swiss bank’s $2.3 bln trading loss. But firing CEO Ossie Gruebel or investment banking chief Carsten Kengeter would add to the upheaval. The board should concentrate on determining strategy - and plan succession accordingly.
European bank rescues risky terrain for Gulf SWFs 22 Sep 2011 It’s 2007 again in the banking sector. Valuations are rock bottom and troubled institutions are turning to the Gulf. But the track record of the region’s sovereign funds is mixed. Some portfolios are already bulging with financials. At least SWFs can try to learn from the past.
New CEO wouldn’t fix dysfunctional HP board 21 Sep 2011 The tech group’s directors are thinking about jettisoning yet another boss, Leo Apotheker, after less than a year and right after green-lighting his $12 bln purchase of Autonomy and other radical changes that have rattled shareholders. But the board may be the real problem.
How much more capital do Europe’s banks need? 21 Sep 2011 Politicians are beginning to accept that lenders need bigger buffers to reflect sovereign risk. Though most could handle a Greek default, they may also require higher ratios to handle contagion. But raising the capital bar would leave governments with a big hole to fill.
Singapore not quite helpless over UBS losses 21 Sep 2011 The city state’s sovereign fund is understandably disappointed with its investment in the Swiss bank. The 6.5 pct stake may still come good, especially if UBS directs future business to Singapore. Even so, GIC may want to rethink the wisdom of being a purely passive shareholder.
ECB must give bank sickness long-term cure 21 Sep 2011 The European Central Bank is flooding Europe with short-dated funds to ease money market tensions. But banks are still struggling to issue long-term debt, increasing the risks of a dangerous credit crunch. The ECB should ease the strain by setting up a longer-term facility.